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TMI Blog2004 (4) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... nt for deciding the present controversy. After making an order under section 245D(1) of the Act, the Settlement Commission, after examination of all the material placed on record and after giving an opportunity to the applicants as contemplated, in exercise of the power under sub-section (4) of section 245D of the Act, made an order on or about May 13, 1998. The terms of settlement are placed on record (in CWP No. 3322 of 2003 at page 73). It is a part of the order under section 245D(4). One of the terms of settlement, i.e., No. 23, refers to waiver of interest under sections 234A, 234B and 234c. The other terms of settlement being not relevant for deciding this petition, are not referred to. It appears that thereafter the Commissioner of Income-tax moved an application for rectifying a mistake apparent from the record before the Settlement Commission, inter alia, stating that the Commission has the power to grant immunity only from prosecution and penalty and it is not within the ambit of its power to make any order whereby statutory interest, as provided under sections 234A, 234B and 234C of the Act is waived or reduced. It was contended before the Commission, that on the taxabi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the Settlement Commission, the petitioners have contended before us that after the orders made on May 13, 1998, the Settlement Commission has no power to recall the earlier order made by it. It was further submitted that the said order was passed after considering the provisions of law and various decisions of the Supreme Court. It was further contended that if in some subsequent decision the court has held that the Settlement Commission has no power to waive or reduce the interest, the finality of the order made by it in 1998 cannot be disturbed after a period of about four years. As against that, it was submitted by learned counsel for the Revenue that the powers can be exercised under the Act for rectification by the Settlement Commission and the Settlement Commission was within its power to rectify the order under section 154 of the Act. Chapter XIX-A refers to settlement of cases. Section 245A provides the definitions. Section 245B makes a provision for constitution of a Settlement Commission. Section 245BA indicates the jurisdiction and power of the Settlement Commission. Section 245BB indicates the entitlement of the vice-chairman to act as a chairman under certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tates that the settlement shall be void if it is obtained by fraud or misrepresentation of facts. On failure to pay the tax payable in pursuance of an order under sub-section (4) within 45 days of the receipt of a copy of the order or where the Commission has extended the time limit for payment of such tax or has allowed instalments for payment thereof, the assessee shall be liable to pay simple interest at 15 per cent. per annum on the amount remaining unpaid from the date of the expiry of the period. In case the settlement becomes void under the said sub-section (6), the matter shall be deemed to have been revived from the stage from which the application was allowed and the income-tax authority concerned, may, notwithstanding anything contained in any provisions of the Act, complete such proceedings at any time before the expiry of two years from the end of the financial year in which the settlement became void. It is in view of this when fraud or misrepresentation of facts are found, then in that case only the Assessing Officer shall have to proceed and will have to complete the assessment within the period as indicated therein. Section 245E also authorises the Settlement Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions of an income-tax authority until an order is made under sub-section (4) of section 245D of the Act. After the order is made under sub-section (4) of section 245D of the Act, the Commission will have no jurisdiction to exercise the power and perform the function of an income-tax authority. On behalf of the Revenue, it was submitted that exactly in a similar situation an order was made under section 154 of the Act withdrawing the reduction or waiver of interest granted by a Settlement Commission under sections 234A, 234B and 234C of the Act while passing an order under section 245D(4) of the Act. The assessee moved the High Court under article 226 of the Constitution of India (AOP of Sanjaybhai R. Patel v. Assessing Officer [2004] 267 ITR 129 (Guj)). The court held that it was a mistake apparent from the record and the said mistake was rightly rectified by the Settlement Commission while resorting to section 154 of the Act. A division Bench in the case of Sanjaybhai R. Patel's case [2004] 267 ITR 129 (Guj) accepted the contention of the Revenue that the Settlement Commission was justified in taking the view that the order passed under section 245D(4) of the Act granting reduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read with section 116 the Commission could exercise the power as the Board under section 119 of the Act. The court pointed out that power under section 119 is vested in the Board and the context in which the power is vested in the Commission under section 245C indicates that Parliament did not intend that power under section 119 could be exercised by the Commission for granting such relief and the Commission cannot be equated with the Board for exercise of power under section 119 of the Act. The Supreme Court also pointed out that "its orders (Settlement Commission's) under section 245-I are conclusive which cannot be reopened in any proceedings under the Act or any other law for the time being in force". It is in view of this, the Settlement Commission which has become functus officio after passing an order, cannot reopen the case. The question when an authority becomes functus officio and what follows thereafter has been the subject matter of several decisions of the Supreme Court. In this context, the powers to be exercised by the Collector under the provisions contained in the Stamp Act came to be examined by the apex court in the case of Government of Uttar Pradesh v. Raja M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only if authorised under the Act and under that Chapter only. It is clear that except in the manner provided in the Chapter, the case cannot be reopened for any purpose unless there is fraud or misrepresentation. After the order is made under sub-section (4) of section 245D it becomes final and conclusive and the same can be modified only in the manner specifically provided in the Chapter and not in view of the other provisions contained in the Act. Reading the provisions of section 245F(1) and (2), sections 245H and 245D(6) it is clear that the order which has become conclusive as to the matters stated therein, cannot be disturbed except as provided in this Chapter and it is not open to reopen the proceedings under the provisions contained in the Act. The Supreme Court has specifically pointed out that the orders cannot be reopened in any proceedings under the Act or any other law for the time being in force. It is not possible to accept the contention raised by the Revenue that the Settlement Commission has all the rights and powers given to the income-tax authority under the Act. Learned counsel for the Revenue submitted that section 245F empowers the Settlement Commission to r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rall scheme and object. The decision has to be taken by the Settlement Commission having regard to all the facts and circumstances before it, in the light of the object, purpose and scheme of the enactment. The Settlement Commission has to provide for the terms of settlement including any demand by way of tax, penalty or interest, the manner in which any sum due under the settlement shall be paid, etc. When sub-section (6) of section 245D refers to terms of settlement, it should be construed in a grammatical sense to mean the terms of agreement, arrangement or undersigned. The Settlement Commission was approached by the assessee and in accordance with law, the order was made by the Settlement Commission and the terms of settlement provided mode of payment, etc. The Revenue accepted the same and did not challenge the correctness of the order made by the Settlement Commission. Thus between the assessee and the Assessing Officer or the Commissioner of Income-tax when the decision was rendered by the Settlement Commission, the matter was settled and came to be disposed of finally and it could be reopened in the manner provided in that Chapter itself or can be reviewed as provided in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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